8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 3, 2006 

THE TALBOTS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-12552	41-1111318
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One Talbots Drive, Hingham, Massachusetts	02043
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 749-7600

              Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR   240.13e-4(c))

SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS

Item 1.01        Entry into a Material Definitive Agreement

Executive Officers

The Talbots, Inc. (“Talbots”) announced on May 3, 2006 that effective as of the closing of the acquisition by Talbots of The J. Jill Group, Inc. (“J. Jill”) on May 3, 2006, Philip H. Kowalczyk has become President of J. Jill, replacing Gordon R. Cooke who, as previously disclosed by Talbots, is retiring from J. Jill effective May 12, 2006.  In connection with his appointment as President of J. Jill, Mr. Kowalczyk will receive (i) an increase in his base annual salary to $625,000 from $513,760, (ii) a grant of additional stock options for 15,000 shares of Talbots common stock which vest in one-third annual increments beginning May 8, 2007 with an exercise price equal to the closing price of Talbots common stock on the grant date of May 8, 2006, (iii) 5,000 shares of performance accelerated restricted stock which vest on or about March 3, 2011 subject to possible earlier vesting on or about April 15, 2009 based on Company performance against return on net assets and (iv) an increase in the multiplier used in calculating his annual incentive bonus under the Management Incentive Plan from 40% of base salary to 45% of base salary.  Mr. Kowalczyk will continue as an executive officer of Talbots and as a member of its Executive Committee but is ceasing as Executive Vice President/Chief Administrative Officer of Talbots as of May 3, 2006.

Talbots also announced on May 3, 2006 that effective as of May 3, 2006, Olga L. Conley, who has been Executive Vice President/Chief Financial Officer and Chief Administrative Officer of J. Jill, has been appointed as Executive Vice President, Administration of Talbots, with responsibility for many of the areas previously held by Mr. Kowalczyk.  In connection with her appointment to this new executive officer position at Talbots, Ms. Conley received a salary increase to $475,000, 59,890 shares of Talbots restricted stock which will vest on or about May 8, 2008, as well as participation in Talbots Management Incentive Plan at a 40% target level.  Prior to serving as Executive Vice President/Chief Financial Officer and Chief Administrative Officer of J. Jill, Ms. Conley served as Executive Vice President/Chief Financial Officer of J. Jill from October 2003 to June 2005 and President – Corporate Services and Chief Financial Officer of J. Jill from March 2001 to October 2003.

Amendment to Lease Agreement

On May 3, 2006, National Fire Protection Association, a Massachusetts non-profit corporation (“Landlord”) and The J. Jill Group, Inc. (“Tenant”), a wholly-owned subsidiary of The Talbots, Inc., a Delaware corporation (the “Company”), entered into the Third Amendment (the “Amendment”) to the Lease Agreement dated as of September 21, 1998, as amended by the First Amendment to Lease Agreement dated June 10, 1999, and as further amended by the Second Amendment to Lease Agreement dated as of October 29, 1999 (as so amended, the “Lease”), pursuant to which Landlord leased to Tenant approximately 126,869 square feet of the building (the “Building”) located at Four Batterymarch Park, Quincy, Massachusetts, to serve as J. Jill’s corporate headquarters.

Pursuant to the terms of the Amendment, the term of the Lease (the “Term”) expires on December 31, 2014.  Annual rent payments due under the lease range from approximately $3.1 million to $3.55 million over the course of the Term.

On May 3, 2006, the Company executed a Guarantee of Lease for the benefit of the Landlord, thereby guaranteeing performance by the Tenant of the obligations and covenants contained within the Lease and the Amendment. 

SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

The disclosure provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01	Financial Statements and Exhibits
(d)	Exhibits
	10.1	Third Amendment to Lease Agreement, made as of May 3, 2006, by and between National Fire Protection Association and The J. Jill Group, Inc.
	10.2	Guarantee of Lease, made as of May 3, 2006, by The Talbots, Inc. to National Fire Protection Association.

    

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE TALBOTS, INC.
Dated: May 9, 2006	By:	/s/ Richard T. O’Connell, Jr.
	Name:	Richard T. O’Connell, Jr.
	Title:	Senior Vice President, Legal and Real Estate and Secretary

EX-10.1

Exhibit 10.1

Execution Copy

THIRD AMENDMENT TO LEASE AGREEMENT

This Third Amendment to Lease Agreement (the “Amendment”) is made as of the 3rd day of May, 2006, by and between NATIONAL FIRE PROTECTION ASSOCIATION, a Massachusetts non-profit corporation (“Landlord”) and THE J. JILL GROUP, INC., a Delaware corporation (“Tenant”).

WITNESSETH:

WHEREAS, Landlord and Tenant (formerly known as DM Management Company) are parties to that certain Lease Agreement dated as of September 21, 1998, as amended by that certain First Amendment to Lease Agreement dated June 10, 1999, and as further amended by that certain Second Amendment to Lease Agreement dated as of October 29, 1999 (as so amended, the “Lease”), pursuant to which Landlord leased to Tenant a portion of the building located at Four Batterymarch Park, Quincy, Massachusetts (the “Building”), consisting of approximately 63,943 rentable square feet of space on the fourth (4^th) and fifth (5^th) floors of the Building (the “Original Premises”);

WHEREAS, Lumbermen’s Mutual Casualty Company (d/b/a Kemper Insurance Company)(“Kemper”) and Tenant were parties to that certain Sublease dated as of August 28, 2003 pursuant to which Tenant sublet from Kemper 29,305 rentable square feet of space on the third (3rd) floor of the Building (the “Kemper Space”), which Sublease was recognized by Landlord pursuant to a letter to Tenant dated March 4, 2005 (as so recognized, the “Sublease”); and

WHEREAS, Landlord and Tenant have agreed to terminate the Sublease and include the Kemper Space as part of the Premises, to increase the Premises to include 33,621 rentable square feet on the second (2^nd) floor of the Building (the “Second Floor Space”), to extend the term of the Lease through December 31, 2014, and to amend certain other terms and conditions of the Lease as set forth herein.

NOW THEREFORE, for good and valuable consideration, and in consideration of the covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.     Defined Terms. Capitalized terms not defined herein shall have the meanings ascribed to them in the Lease.

2.     Effective Date. The Effective Date is hereby defined as January 1, 2007.

3. Termination of Sublease. The Sublease shall terminate without further action of the parties on the Effective Date. From and after the Effective Date, the Kemper Space shall be included in the definition of Premises under the Lease. Until the Effective Date, Landlord shall continue to recognize Tenant’s rights to the Kemper Space upon the terms and conditions of the Sublease.

 4. Amendments. As of the Effective Date, the Lease is hereby amended as follows:

(i)         Article I, Section 1.2 is hereby amended to delete the definition of “Premises Rentable Area” and substitute therefor the following:

“Premises Rentable Area: Approximately 126,869 rentable square feet, comprised of 63,943 rentable square feet on the fourth (4^th) and fifth (5^th) floors of the Building, 29,305 rentable square feet on the third (3^rd) floor of the Building, and 33,621 rentable square feet on the second (2^nd) floor of the Building.”

(ii)         Article I, Section 1.2 is hereby amended to provide that the Base Operating Expenses shall be the actual Operating Expenses for the Property for calendar year 2007, and the Base Taxes shall be the actual Taxes for the Property for the period July 1, 2006 through June 30, 2007.

(iii)        Exhibit FP attached to the Lease is hereby amended by adding Exhibit FP-2 attached hereto and incorporated herein by reference.

5.       Term of this Lease. Landlord and Tenant acknowledge and agree that as of the Effective Date all references to the “Term of this Lease” shall mean the period commencing on the Effective Date and expiring on December 31, 2014, and any extension thereof pursuant to Section 15.2 of the Lease.

6.       Basic Rent. Commencing on the Effective Date, Section 1.2 of the Lease is hereby amended to provide that the Bask Rent shall be paid as follows:

Year 1 (1/1/07-12/31/07):	$24.50 per square foot of the Premises Rentable Area
Year 2 (1/1/08-12/31/08):	$25.00 per square foot of the Premises Rentable Area
Year 3 (1/1/09-12/31/09):	$25.50 per square foot of the Premises Rentable Area
Year 4 (1/1/10-12/31/10):	$26.00 per square foot of the Premises Rentable Area
Year 5 (1/1/11-12/31/11):	$26.50 per square foot of the Premises Rentable Area
Year 6 (1/1/12-12/31/12):	$27.00 per square foot of the Premises Rentable Area
Year 7 (1/1/13-12/31/13):	$27.00 per square foot of the Premises Rentable Area
Year 8 (1/1/14-12/31/14):	$28.00 per square foot of the Premises Rentable Area

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7.     Free Rent. Landlord and Tenant hereby agree that Tenant shall not be obligated to pay Basic Rent for the Second Floor Space for the period commencing on the Effective Date and ending April 30, 2007; provided, however if full possession of the Second Floor Space shall not be delivered to Tenant in the condition described in Paragraph 11 herein on or before the Effective Date, then Basic Rent for the Second Floor Space shall be abated for one additional day for each day of late delivery of the Second Floor Space, so that Tenant shall have the full benefit of four full months of free Basic Rent for such space.

8.     Right of First Offer. Section 15.1 of the Lease is hereby deleted in its entirety and the following is substituted therefor:

“Provided that there is at least one year remaining in the Term of this Lease and that Tenant is not in default in the performance or observance of any of the terms and provisions of this Lease on the part of Tenant to be performed or observed beyond applicable grace and cure periods, if Landlord intends to market for lease all or any portion of any space in the Building (the “Available Space”), then Landlord shall present a term sheet (“Landlord’s Offer”) for the leasing of the Available Space to Tenant at fair market rent, as determined by Landlord, and on such other terms and conditions as Landlord may determine. Except as otherwise set forth in Landlord’s Offer, Landlord’s Offer to lease the Available Space shall be on the terms and conditions set forth herein.

Upon receipt of Landlord’s Offer, Tenant shall have ten (10) business days to accept or reject Landlord’s Offer. If Tenant accepts Landlord’s Offer within said ten (10) business day period, Landlord and Tenant shall execute an amendment to this Lease which incorporates the Available Space on the terms set forth therein within fifteen (15) days of Tenant’s acceptance of Landlord’s Offer. In the event that Tenant does not accept Landlord’s Offer within said ten (10) business day period or Landlord and Tenant do not execute a lease amendment on the terms set forth therein within said fifteen (15) day period, then Landlord shall have the right to lease to any other party the Available Space on such terms and conditions not materially more favorable than those contained in Landlord’s Offer. As used herein, terms and conditions shall be deemed to be “materially more favorable” if the rental rate and other economic considerations (such as free rent, improvement allowances and the manner in which Operating Expenses and Taxes are accounted for) are less than ninety percent (90%) of the terms and conditions contained in Landlord’s Offer.”

9.     Option to Extend. Landlord and Tenant hereby confirm that Tenant’s two successive five-year options to extend the Term of this Lease as described in Section 15.2 of the Lease shall remain in full force and effect.

10.   Tenant Improvement Allowance.

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(i)         Landlord shall, in the manner hereinafter set forth, provide to Tenant an improvement allowance of $2,234,160.00, including (i) $1,008,630.00 for leasehold improvements for the Second Floor Space (the “Second Floor Allowance”), made available as provided herein from and after the Effective Date; (ii) $639,430.00 for leasehold improvements for the Original Premises (the “Original Premises Allowance”), made available as provided herein from and after January 1, 2010; and (iii) $586,100.00 for leasehold improvements for the Kemper Space (the “Kemper Space Allowance”), made available as provided herein from and after January 1, 2010 (collectively, the “Tenant Improvement Allowance”), which Tenant Improvement Allowance shall be used for the cost of construction, architectural fees, wiring and other move related costs (“Tenant’s Work”). Tenant, in its sole discretion, shall have the right to redistribute the Tenant Improvement Allowance throughout the Premises.

(ii)        Tenant’s Work shall be performed in accordance with the requirements of Section 5.2 of the Lease and shall:

(a)	be subject to the approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed; and
(b)	be made only by union contractors (which union contractors shall use union subcontractors) approved by Landlord which approval shall not be unreasonably withheld, conditioned or delayed.

(iii)        Provided that Tenant is not in default of its obligations under the Lease beyond any applicable cure period at the time that Tenant requests any requisition on account of the Tenant Improvement Allowance, Landlord shall pay the cost of the work shown on each requisition (as defined below) submitted by Tenant to Landlord within thirty (30) days of submission thereof by Tenant to Landlord. For the purposes hereof, a “requisition” shall mean written documentation showing in reasonable detail the costs of the improvements then installed by Tenant. Each requisition shall be accompanied by evidence reasonably satisfactory to Landlord that all work covered by previous requisitions has been fully paid by Tenant. Landlord shall have the right, upon reasonable advance notice to Tenant, to inspect Tenant’s books and records relating to each requisition in order to verify the amount thereof. Tenant shall submit requisition(s) no more often than monthly.

(iv)        Notwithstanding anything to the contrary herein contained:

(a)      Landlord shall have no obligation to advance funds on account of the Tenant Improvement Allowance unless and until Landlord has received the requisition in question, together with, in the case of the final requisition, certifications from Tenant’s architect, certifying that the work shown on the requisition has been performed in all material respects in accordance with applicable law and in accordance with Tenant’s approved plans.

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(b)      Except with respect to work and/or materials previously paid for by Tenant, as evidenced by paid invoices provided to Landlord, Landlord shall have the right to have the Tenant Improvement Allowance paid to both Tenant and Tenant’s contractor(s) and vendor(s) jointly, or directly to Tenant’s contractor if Landlord has reason to believe there are or may be outstanding claims by such contractor(s) or vendor(s).

(v)         Except for the Tenant Improvement Allowance, Tenant shall bear all other costs of Tenant’s Work. Landlord shall have no liability or responsibility for any claim, injury or damage alleged to have been caused by the particular materials, whether building standard or non-building standard, selected by Tenant in connection with Tenant’s Work.

(vi)        Any portion of the Tenant Improvement Allowance which has not been disbursed by Landlord by June 30, 2011 shall be credited against Rent due under the Lease, up to a maximum Rent credit of $558,540.00.

11.     Second Floor Space. On or before the Effective Date, Landlord shall deliver the Second Floor Space broom-clean, with all fixtures, debris and personal property of former tenants removed. If the Second Floor Premises shall be vacated by its current tenants prior to the Effective Date, Landlord shall deliver the same to Tenant for purposes of commencing Tenant’s Work. Tenant’s possession of the Second Floor Premises prior to the Effective Date for such purposes shall be subject to all the terms and conditions of the Lease, except that no Rent shall be due or payable for such space during such early occupancy.

12.     Parking. Article II, Section 2.2(a) is hereby amended to provide that Tenant shall have the right, appurtenant to the Premises, to use 406 parking spaces on a non-exclusive, first-come, first-served basis, such spaces to be available in a surface level parking lot, and 38 designated parking spaces in the parking garage located under the Building (at least 5 of which shall continue to be closest to the elevator).

13.     Assignment and Subletting. Article VI is hereby amended as follows:

(i)         Subsection 6.1(a) is amended by deleting the reference in the eleventh line to “(except to another tenant in the Building or other buildings owned by Landlord or its beneficiaries)” and substituting “(except for all subleases entered into and commencing after December 31, 2008 to another tenant in the Building or other buildings owned by the Landlord or its beneficiaries)” in its place.

(ii)         Subsection 6.3 is amended by deleting the reference in the third line to “the second sentence of Paragraph a.” and substituting “the third sentence of Paragraph a.” in its place.

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14.     Merger. Landlord acknowledges that The Talbots, Inc., a Delaware corporation, publicly traded on the New York Stock Exchange (“Guarantor”), has this day acquired Tenant and Tenant has become a wholly-owned subsidiary of Guarantor (such transaction being referred to herein as the “Merger”). Subject to Guarantor’s execution and delivery of a guaranty of Tenant’s obligations under the Lease, as amended hereby, in the form attached hereto as Exhibit G (the “Guarantee”), Landlord hereby consents to the Merger.

15.     Security Deposit. Landlord acknowledges that it is holding a cash security deposit in the current amount of $400,000.00 (the “Security Deposit”). In consideration of Guarantor’s execution and delivery of the Guarantee, Landlord agrees to return the Security Deposit to Tenant on the date hereof.

16.     Notices. Landlord agrees that any notice under the Lease or Sublease of a Default of Tenant shall also be sent to Guarantor at: The Talbots, Inc., One Talbots Drive, Hingham, Massachusetts 02043, Attention: General Counsel.

17.     Brokerage Representations. Landlord and Tenant each represents that said party has not dealt with any broker in connection with this Amendment except CB Richard Ellis (the “Broker”). Each party hereby agrees to defend, indemnify and hold harmless the other party from and against any loss, cost or expense (including reasonable attorneys fees) incurred as a result of its breach of the foregoing representation. Landlord shall be responsible for any commissions due the Broker in connection with this Amendment.

18.     Governing Law. This Amendment shall be construed in accordance with the laws of the Commonwealth of Massachusetts, and may only be amended in a writing signed by all the parties hereto. The invalidity of one or more of the provisions contained herein as amended hereby shall not affect the remaining provisions of the Lease, and if one or more of such provisions shall be declared invalid by final order, decree or judgment of a court of competent jurisdiction, the Lease shall be construed as if such invalid provision or provisions had not been included in the Lease.

19.     Consistency. In the event that any provision of this Amendment is inconsistent with the Lease, this Amendment shall control.

20.     Ratification and Estoppel. Except as herein amended, the Lease shall remain in full force and effect in accordance with its terms. Each party represents to the other that such party is currently unaware of any default by the other party under the Lease or the Sublease.

21.     Counterparts. This Amendment may be executed in one or more identical counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

[End of text on page. Signatures follow on next page.]

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EXECUTED as a sealed instrument as of the day and year first above written.

LANDLORD:
NATIONAL FIRE PROTECTION ASSOCIATION
By:	/s/ Bruce Mullen
Name:	Bruce Mullen
Title:	Chief Financial Officer

 

TENANT:
THE J. JILL GROUP, INC.
By:	/s/ Olga L. Conley
Name:	Olga L. Conley
Title:	Executive Vice President, Chief Financial
	Officer and Chief Administrative Officer

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EX-10.2

Exhibit 10.2

Execution Copy

GUARANTEE OF LEASE

GUARANTEE OF LEASE made as of the 3^rd day of May, 2006 by THE TALBOTS, INC., a Delaware corporation, publicly traded on the New York Stock Exchange, having an address at One Talbots Drive, Hingham, Massachusetts 02043 (“Guarantor”) to NATIONAL FIRE PROTECTION ASSOCIATION, a Massachusetts non-profit corporation, having an address at One Batterymarch Park, Quincy, Massachusetts 02169 (“Landlord”).

Reference is made to the following facts:

A.     Landlord has requested Guarantor to guarantee that certain Lease Agreement dated as of September 21, 1998, as amended by that certain First Amendment to Lease Agreement dated June 10, 1999, as further amended by that certain Second Amendment to Lease Agreement dated October 29, 1999, and as further amended by that certain Third Amendment to Lease Agreement of even date herewith (as so amended, the “Lease”), with J. Jill Group, Inc., a Delaware corporation, as tenant (“Tenant”), of certain premises located at Four Batterymarch Park, Quincy, Massachusetts. Defined terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Lease.

B.     Tenant is an affiliate of Guarantor.

C.     Guarantor is willing to guarantee performance by Tenant of the covenants contained in the Lease on the part of Tenant to be performed, to induce Landlord to enter into the Lease with Tenant.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, Guarantor hereby agrees with and guarantees to Landlord as follows:

1.     Guarantor unconditionally, absolutely and irrevocably guarantees to Landlord the prompt payment when due of the rent, additional rent and other charges payable under the Lease, the full and faithful performance, and observance of any and all covenants, conditions, obligations and agreements contained in the Lease (collectively, the “Covenants”) on the part of Tenant to be performed and observed, and the payment of all costs, expenses and damages which may arise as a result of any Tenant default under the Lease, or any default under this Guarantee; and Guarantor unconditionally covenants and agrees with Landlord that, if default or breach shall at any time be made by Tenant in the Covenants to pay rent, additional rent, or to perform any of the other Covenants contained in the Lease, and notice of such default or breach shall have been given by Landlord to Tenant to the extent required under the Lease, and neither Tenant nor Guarantor shall have cured such default or breach within the applicable grace period, if any, provided for in the Lease, Guarantor shall perform the Covenants, pay the rent, additional rent or other charges or arrears thereto that may remain due thereon to Landlord, and pay any and all damages stipulated in the Lease with respect to the non-performance of the Covenants.

2.     Guarantor expressly agrees that the liability of Guarantor hereunder shall not be impaired, abated, deferred, diminished, modified, released, terminated or discharged, in whole or in part, or otherwise affected by any of the following:

(a)     any amendment or modification of the provisions of the Lease made with the consent of Guarantor;

(b)     any extensions of time for performance, whether in whole or in part, of the Covenants under the Lease on the part of Tenant to be performed given prior to or after default thereunder;

(c)     any exchange, surrender or release, in whole or in part of any security which may be held by Landlord at any time for or under the Lease;

(d)     any other guarantee now or hereafter executed by Guarantor or anyone else except as may be otherwise provided in the Lease;

(e)     any waiver of or assertion or enforcement or failure or refusal to assert or enforce, in whole or in part, any Covenants, claims, causes of action, rights or remedies which Landlord may, at any time, have under the Lease or with respect to any guarantee or any security which may be held by Landlord at any time under the Lease or with respect to Tenant;

(f)     the release of any other guarantor from liability for the performance or observance of any other covenants under the Lease on the part of Tenant to be performed, whether by operation of law or otherwise;

(g)     Landlord’s consent to any assignment or subletting of the Lease by Tenant, or any subletting of the Premises demised under the Lease by Tenant;

(h)     any rights, powers or privileges Landlord may now or hereafter have against any person, entity or collateral;

(i)     any assignment, conveyance, mortgage, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or any part of Tenant’s interest in the Lease or the occurrence of any such assignment, conveyance, mortgage, merger or other voluntary or involuntary transfer which results in Guarantor becoming Tenant under the Lease;

(j)     any assignment, conveyance, mortgage, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or part of the interest or rights of Landlord under the Lease; or

(k)     any failure to enforce any of the terms, covenants or conditions of the Lease or this Guarantee.

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In the event that any agreement or stipulation between Landlord and Tenant shall extend the time of performance or modify any of the covenants of the Lease on the part of Tenant to be performed, Guarantor shall continue to be liable upon its guarantee according to the tenor of any such agreement or stipulation.

3.     To hold Guarantor liable under this Guarantee no demand shall be required. Landlord shall have the right to enforce this Guarantee without pursuing any rights or remedies of Landlord against Tenant or any other party, or any security Landlord may hold; it being intended that if (i) there shall occur any reach, insolvency or bankruptcy default or any other default by Tenant in the performance or observance of any Covenant in the Lease, (ii) notice of any such default or breach shall have been given by Landlord to Tenant, and (iii) Tenant and Guarantor shall have failed to cure such default or breach within the applicable grace period, if any, then Guarantor shall be obligated to perform its obligations hereunder. Landlord may, at its option but after the expiration of any applicable grace periods under the Lease, proceed against Guarantor, or any one or more guarantors if there be more than one, without having commenced any action, or having obtained any judgment against Tenant or against Guarantor or against any other guarantor if there be more than one; and Guarantor’s and each other guarantor’s liability with regard to the Lease shall be as a primary party, with the same force and effect as if Guarantor and each other guarantor had originally signed the Lease as a tenant. Any one or more successive and/or concurrent actions may be brought hereon against Guarantor either in the same action, if any, brought against Tenant or any other party or in separate actions, as often as Landlord, in its sole discretion, may deem advisable.

4.     Guarantor hereby expressly waives and releases (i) notice of the acceptance of this Guarantee (any requirement for acceptance of this Guarantee by Landlord is hereby waived) and notice of any change in Tenant’s financial condition; (ii) the right to interpose all substantive and procedural defenses of the law of guarantee, indemnification and suretyship, except the defenses of prior payment or prior performance by Tenant or Guarantor (of the obligations which Guarantor is called upon to pay or perform under this Guarantee); (iii) all rights and remedies accorded by applicable law to guarantors, or sureties, including without limitation, any extension of time conferred by any law now or hereafter in effect; (iv) the right to trial by jury, in any action or proceeding of any kind arising on, under, out of, or by reason of or relating in any way to Guarantee or the interpretation, breach or enforcement thereof; (v) the right to interpose any defense (except as allowed under (ii) above), set off or counterclaim (unless the failure to interpose such counterclaim would constitute a bar to a separate proceeding and a waiver of such claim) of any nature or description in any action or proceeding (provided nothing stated herein shall prevent Guarantor from bringing a separate proceeding of any nature or description); and (vi) any right or claim or right to cause a marshalling of Tenant’s assets or to cause Landlord to proceed against Tenant, and/or any collateral held by Landlord at any time or in any particular order.

5.     Without limiting Guarantor’s obligations elsewhere under this Guarantee, Guarantor agrees that if Tenant, or Tenant’s trustee, receiver or other officer with similar powers with respect to Tenant, rejects, disaffirms or otherwise terminates the Lease pursuant to any bankruptcy, insolvency, reorganization, moratorium or any other law affecting creditors’ rights generally, Guarantor shall automatically be deemed to 

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have assumed, from and after the date such rejection, disaffirmance or other termination of the Lease is deemed effective, all obligations and liabilities of Tenant under the Lease to the same extent as if Guarantor had been originally named instead of Tenant as a party to the Lease and the Lease had never been so rejected, disaffirmed or otherwise terminated. Guarantor, upon such assumption, shall be obligated to perform and observe all of the terms, conditions and covenants of the Lease to be observed and performed by Tenant thereunder whether theretofore accrued or thereafter accruing, and Guarantor shall be subject to any rights to remedies of Landlord which may have theretofore accrued or which may thereafter accrue against Tenant on account of any default under the Lease, notwithstanding that such defaults existed prior to the date Guarantor was deemed to have automatically assumed the Lease or that such rights or remedies are unenforceable against Tenant by reason of such rejection, disaffirmance or other termination. Guarantor shall confirm such assumption in writing at the request of Landlord upon or after such rejection, disaffirmance or other termination, but the failure to do so shall not affect such assumption. Guarantor, upon the assumption of the Lease, shall have all the rights of Tenant under the Lease (to the extent permitted by law). Neither Guarantor’s obligation to make payment in accordance with the terms of this Guarantee nor any remedy for the enforcement thereof shall be impaired, modified, changed, stayed, released or limited in any manner whatsoever by any impairment, modification, change, release, limitation or stay of the liability of Tenant or its estate in bankruptcy or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of the Bankruptcy Code of the United States or other statute or from the decision of any court interpreting any of the same, and Guarantor shall be obligated under this Guarantee as if no such impairment, stay, modification, change, release or limitation had occurred. Without limiting the generality of the foregoing, Guarantor hereby waives all suretyship defenses or defenses in the nature thereof.

6.     This Guarantee and all rights, obligations and liabilities arising hereunder shall be construed according to the laws of the Commonwealth of Massachusetts. Guarantor hereunder agrees that any legal action, suit, or proceeding against it with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Guarantee or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding shall be brought in the United States Courts for the District of Massachusetts, or in the courts of the Commonwealth of Massachusetts, as Landlord may elect, and, by execution and delivery of this Guarantee, Guarantor hereby irrevocably accepts and submits to the venue and non-exclusive jurisdiction of each of the aforesaid courts in persona, generally and unconditionally with respect to any such action, suit, or proceeding for itself and in respect of its property. Guarantor further agrees that final judgment against it in any action, suit, or proceeding referred to herein shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of its indebtedness.

7.     Until all the Covenants in the Lease on Tenant’s part to be performed and observed are fully performed and observed, Guarantor: (a) shall have no right of subrogation against Tenant by reason of any payments or acts of performance by Guarantor, in compliance with the obligations of Guarantor hereunder; and (b) subordinates any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord under the Lease.

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8.       Guarantor represents and warrants to Landlord that as of the date hereof:

(a)     Guarantor has full power, authority and legal standing to enter into this Guarantee, and abide by the terms hereof, including, without limitation, the payment of all moneys required herein.

(b)     The execution, delivery and performance by Guarantor of this Guarantee has been duly authorized by all necessary corporate action.

(c)     This Guarantee constitutes the legal, valid and binding obligation of Guarantor.

(d)     Guarantor is an affiliate of Tenant, and has received full, fair and adequate consideration for the within Guarantee.

9.        If Landlord shall be obligated by reason of any bankruptcy, insolvency or other legal proceeding to pay or repay to Tenant or to any trustee, receiver or other representative of the Tenant, any amounts previously paid by Tenant pursuant to the Lease, Guarantor shall reimburse Landlord for any such payment or repayment and this Guarantee shall extend to the extent of such payment or repayment made by Landlord.

10.      Guarantor shall, at any time and from time to time, within ten (10) days following the request by Landlord, execute, acknowledge and deliver to Landlord a statement certifying that this Guarantee is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating such modifications) and that to the best of Guarantor’s knowledge, Guarantor is not in default hereunder (or if there is such a default, describing such default in reasonable detail).

11.      All remedies afforded to Landlord by reason of this Guarantee or the Lease, or otherwise available at law or in equity, are separate and cumulative remedies and it is agreed that no one remedy, whether or not exercised by Landlord, shall be deemed to be in exclusion of any other remedy available to Landlord and shall not limit or prejudice any other legal or equitable remedy which Landlord may have.

12.      Guarantor waives trial by jury of any and all issues arising in any action, suit or proceeding to which Landlord and Guarantor may be parties upon, under or connected with this Guarantee or any of its provisions, directly or indirectly. If there is more than one guarantor of the Lease, Guarantor and such other guarantor(s) shall be jointly and severally liable. Guarantor represents that, as of the date hereof, Guarantor is the sole owner of Tenant.

13.      If any term, covenant, condition or provision of this Guarantee or the application thereof to any circumstance or to Guarantor shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Guarantee or the application thereof to any circumstances or to Guarantor, other than those as to which any term, covenant, condition or provision is held invalid or unenforceable, shall not be affected thereby and each remaining term, covenant, condition and provision of this Guarantee shall be valid and shall be enforceable to the fullest extent permitted by law.

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14.     This Guarantee may be modified only by an instrument in writing signed by duly authorized representatives of Landlord and Guarantor.

15.     Whenever, by the terms of this Guarantee, notice shall or may be given either to Landlord or to Guarantor, such notice shall be in writing and shall be sent by registered or certified mail, postage prepaid or by so-called “express” mail (such as Federal Express or U.S. Postal Service Express Mail):

If intended for Landlord, addressed to Landlord at the address first set forth above, or to such other address or addresses as may from time to time hereafter be designated by Landlord by like notice with a copy to Katharine E. Bachman, Esq. at Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, MA 02109.

If intended for Guarantor, addressed to Guarantor at the address set forth above, to the Attention of General Counsel, or to such other address or addresses as may from time to time hereafter be designated by Guarantor by like notice.

All such notices shall be effective when deposited in the United States mail within the Continental United States or when received by the “express” mail carrier, as the case may be.

16.     This Guarantee shall be binding upon Guarantor and its representatives, successors and assigns, and shall inure to the benefit of and may be enforced by the successors, assigns and grantors of Landlord or by any person to whom Landlord’s interest in the Lease or any part thereof, including the rents, may be assigned whether by way of mortgage or otherwise. Wherever in this Guarantee reference is made to either Landlord or Tenant, the same shall be deemed to refer also to the then successor or assign of Landlord and the then permitted successor or assignee of Tenant.

IN WITNESS WHEREOF, Guarantor has executed this Guarantee under seal as of the day and year first above written.

	THE TALBOTS, INC.,
	a Delaware corporation
By:		/s/ Richard T. O’Connell, Jr.
	Name:	Richard T. O’Connell, Jr.
	Title:	Senior Vice President
	Hereunto duly authorized

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